Their families begged and borrowed, often digging deep into retirement savings, to get their sons and daughters through college, unable to tap that once traditional source of paying for college – home equity. The students themselves also have mortgaged themselves up to their eyeballs with student loans (the median debt is $20,000 for under grads), worming their way through cutbacks, larger classrooms and insufficient course offerings. Now, with degrees in hand, those that did not press on for more advanced degrees, have had almost a year to generate that golden result: a job. The spring of 2011 is a good time to see how they fared.
In the pre-recession days of 2006-2008, the average annual starting salary for a new college grad was still a modest $30,000. For the scions of 2010, it was 10% less, $27,000… for those who found a job. The May 18th New York Times reports that while the pre-recession job placement put 90% of the relevant graduating classes into jobs, 2010 fared a lot worse: 56%. What’s sad even about those who found employment, the jobs they got only really required a college degree about half the time; college grads were taking work away from those who simply graduated high school, even though there was no differentiation in skill required. The unemployment rates and levels of compensation for new high school grads entering the job market are even worse, according to the Times.
Not all educational paths produced the same results: “Young graduates who majored in education and teaching or engineering were most likely to find a job requiring a college degree, while area studies majors — those who majored in Latin American studies, for example — and humanities majors were least likely to do so. Among all recent education graduates, 71.1 percent were in jobs that required a college degree; of all area studies majors, the share was 44.7 percent.
“An analysis by The New York Times of Labor Department data about college graduates aged 25 to 34 found that the number of these workers employed in food service, restaurants and bars had risen 17 percent in 2009 from 2008, though thesample size was small. There were similar or bigger employment increases at gas stations and fuel dealers, food and alcohol stores, and taxi and limousine services.” NY Times.
Students are struggling more than ever to service their student loans, while others are coming to the realization that without further specialized advanced (and expensive) degrees, a college education doesn’t mean much these days. Other young people are simply dropping out and moving back home to spend their time in depressed self-examination, giving up the job search in hopes of better times ahead. This wasn’t the life they were promised as they grew up.
The long term impact of an unskilled job or a particularly low pay level is unfortunately significant: “Those who do not go back to school may be on a lower-paying trajectory for years. They start at a lower salary, and they may begin their careers with employers that pay less on average or have less room for growth… ‘Their salary history follows them wherever they go,’ said Carl Van Horn, a labor economist at Rutgers. ‘It’s like a parrot on your shoulder, traveling with you everywhere, constantly telling you ‘No, you can’t make that much money.’” ”
“And while young people who have weathered a tough job market may shy from risks during their careers, the best way to nullify an unlucky graduation date is to change jobs when you can, says Till von Wachter, an economist at Columbia [University].” NY Times. Is the class of 2010 destined to become part of a bitter and lost generation? Is this the hidden explanation about why even the gradual improvement in the Dept. of Labor’s unemployment rates isn’t really showing too much in the way of significant recovery at the consumer level?
I’m Peter Dekom, just keeping it real.
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